Pfizer (PFE) has experienced significant ups and downs in its development in recent years. The pharmaceutical giant achieved major success in the early stages of the pandemic, generating $100 billion in revenue in 2022 through its COVID-19 vaccine and treatment drugs. However, as demand for COVID-related products declined and patents for other blockbuster drugs expired, both the company’s revenue and stock price fell. Should investors avoid Pfizer now? The key lies in the risks during its transition period.
Pfizer is at a critical turning point, with sales of its blockbuster drugs declining. It urgently needs to update its product portfolio with new offerings to drive future growth. This depends entirely on the company’s ability to conduct internal research and development as well as external acquisitions.
The biggest risk for Pfizer currently is that its future largely hinges on the outcomes of its R&D pipeline and recent acquisitions, including the acquisition of Seagen for oncology products and Metsera, which brings an obesity drug pipeline. Pfizer stated in its recent earnings report that this year will be crucial, with the initiation of 20 pivotal trials.
The obesity drug market is an area that could be transformative for Pfizer. Currently, Eli Lilly and Novo Nordisk dominate, but through the acquisition of Metsera, Pfizer hopes to enter this high-demand sector. Analysts predict that the weight-loss drug market could approach nearly $100 billion by the end of the decade, leaving room for multiple pharmaceutical companies to generate blockbuster revenues.
The drug candidate Pfizer gains from this has a potential advantage of once-monthly dosing compared to current weekly therapies. Latest trial data support this low-frequency dosing concept, and Pfizer plans to advance this drug into 10 Phase 3 clinical trials this year.
Despite the promising prospects, risks remain. For any pharmaceutical company, the biggest risk is the failure of drug candidate development. Pfizer’s revival now depends on numerous projects in the pipeline. If the development of key drugs, such as the aforementioned weight-loss drug, hits a snag, the company’s transformation process would be hindered and put significant pressure on its stock price.
Despite the challenges, Pfizer remains worth watching due to its rich pipeline of investigational drugs. Even if certain headwinds slow down the transformation, they are unlikely to halt its progress entirely. As long as a few drug candidates are approved in the coming years, it could usher in a new era of growth for Pfizer.
Looking back at 2020, Pfizer collaborated with BioNTech (BNTX) to develop the COVID-19 vaccine Comirnaty, which became the first product approved in the U.S. and achieved tremendous commercial success. As Comirnaty sales decline, the company’s overall revenue has fallen, impacting its stock price. However, Pfizer currently still has two marketed vaccines, the pneumococcal vaccine Prevnar 20 and the respiratory syncytial virus vaccine Abrysvo, generating considerable revenue.
Furthermore, Pfizer’s R&D pipeline includes several investigational products, such as the Lyme disease vaccine PF-07307405. Besides vaccines, the company also sells drugs for various diseases including autoimmune diseases and cancer, and pays an attractive dividend, making its stock still one of the options for income-seeking investors.
